Elon Musk and Michael Saylor have decided with some miners of North America to create a “Bitcoin Mining Council”. This council is supposed to create transparency about the electricity used for mining and help to make mining greener, i.e. more renewable and CO2-neutral.
The idea behind the Bitcoin Mining Council is simple: Bitcoin consumes a lot of electricity. But more important than the amount is the type of electricity and the associated CO2 emissions. Mining with coal power harms the climate, mining with solar or hydro power is neutral. Some people therefore argue that some Shitcoins are the better solution – they are not.
Some miners already rely on renewable energy
For the most part, however, what matters most is what’s on the electricity bill: CO2-free is good, but cheap is better in a pinch. Until green energy consistently costs less than conventional, mining will (also) remain dirty.
How do you solve this problem? On the one hand, one could call on the politicians: they should please make sure that CO2-free electricity is always cheaper than, say, coal-fired power, and if that fails, they can also impose a regulatory obligation on mining to use green energies.
- The alternative to government intervention is private-sector initiative.
- And that’s what Tesla CEO Elon Musk and MicroStrategy boss Michael Saylor are now trying to make happen.
- The two are currently the most publicly visible major Bitcoin investors, which is why their wishes carry weight, if only because their wallets are bulging.
Musk has previously complained that the CO2 emissions caused by mining – especially when the electricity is generated by coal-fired power – are unacceptable, which is why Tesla is no longer accepting Bitcoins for electric cars for now. Unlike many who stop at the lawsuit, however, he is trying to make a difference.
“I spoke with North American bitcoin miners,” the Tesla CEO tweeted, “and they have committed to disclosing current and planned use of renewables and asking miners worldwide to do the same. Potentially promising.”
He was helped by MicroStrategy CEO Michael Saylor. Presumably, he’s less concerned with the climate – he’s stated somewhat previously that he doesn’t see mining as a problem in that regard – than he is with the value of his investment: high electricity consumption, potentially satisfied by coal-fired power, is hurting Bitcoin’s reputation, and thus its acceptance and, ultimately, its price.
So Saylor declares he was honored to “host the meeting of Elon Musk and the leading Bitcoin miners of North America.” The miners agreed to “form the ‘Bitcoin Mining Council,'” which will promote transparency of energy sources used for mining and “accelerate sustainable initiatives worldwide.”
The following miners participated in the meeting: Argo, Blockcap, Core Scientific, Galaxy Digital, Hive Blockchain Technologies, Hut 8 Mining, Marathon Digital Holdings and Riot Blockchain. These, in fact, make up a selection of the leading North American companies for investment and mining. They decided, Saylor reports, “to form an organization to standardize energy reporting, track ESG goals and educate the market.”
ESG means Environment Social Governance and refers to corporate leaders taking responsibility for social and environmental issues. It’s been a long time coming for ESG to arrive in mining and for investors to clamor for it. Apparently, however, it took the massive public shaming of recent weeks for this to happen. So now, as a first step, miners want to create the transparency needed to even begin to see what impact mining has on CO2 emissions.
How effective can such an agreement be?
Is it merely greenwashing – or does it really aim to do something? And how is the broader bitcoin scene reacting to it?
First, there are doubts about its effectiveness. Not about agreements in general, but about this one in particular. Marshall Long, early adopter and longtime miner, thinks Saylor and Musk were talking to the wrong people. They are good companies, he says, but they only control “a very very small percentage of the hashrate.” Musk would have been better off talking to the Texas Blockchain Association, which provides 15 percent of the global hashrate. “Big Mike” – by which he means Saylor – lost “the respect of a majority of North American hashpower” with the action.
Of course, it is difficult to specify which party controls what percentage of the hashrate. Is Marshall Long right? Or is he just pretending to know more? Is he even offended at not being invited? As a long-time miner, he should know more than Saylor and Musk, who only discovered their passion for Bitcoin in 2020. No doubt he should be right that the newly formed council embodies only a slice of the U.S. mining industry. It alone, Long explains, will not change anything.
To be fair, however, it must also be acknowledged that the Mining Council expressly intends to lobby for more transparency and renewable energy not only within its own organization, but across the industry and around the world. The backing of investors should help it build pressure.
- Nonetheless, it’s fair to ask whether the alliance is just symbolic window dressing after all, aimed less at climate change than at the bitcoin price.
- Miners who make up 10 percent of the hashrate agree to publish information that they already publish anyway crypto influencer Nic Carter, who has been working on the issue, translates the agreement only slightly pointedly.
- Core Scientific, for example, has long disclosed the sources of electricity used for mining and advertises that it is 100 percent CO2-neutral. Still, Carter says, the agreement is “obviously” a good idea.
Basically, everyone agrees. Still, criticism of the agreement is stirring in the scene. On the one hand because of the person behind it, the controversial Elon Musk, and on the other hand because of the way it was reached: “Meetings behind closed doors rarely lead to successful results in Bitcoin’s history,” tweets the account “Documenting Bitcoin,” for example. Other influential Bitcoiners, such as Mir Liponi from Milan and Core developer Eric Lombrozo, also think that backroom agreements leave a bad smell.
Despite all this, the goal of generating as much hashpower as possible through renewable energy is gaining a lot of support in the fundamentally heterogeneous Bitcoin scene. Whether this is about genuine concern for the climate or more about concern for the portfolio is not important in itself. The incentives to remove coal from Bitcoin are there, and they are now starting to kick in.
The Lightning Network
The most popular offchain solution is the Lightning network – learn more here. Those who read this blog regularly know the network from payment channels. It is supported by many bitcoin wallets. For beginners Phoenix is best, for advanced users the developer version of Electrum is recommended. Lightning is now supported by some exchanges, such as Bitfinex, for deposits and withdrawals. Thanks to OpenNode, BTCPayServer and CoinGate, Lightning has also already made it into commerce and has arrived at many acceptance points.
Lightning enjoys great popularity in the community. Therefore, you will find many grassroots acceptance points, for example at Meetups. In everyday life, however, Lightning is still nowhere near as widespread as normal Bitcoin transactions. One reason is that the software is still not fully developed. Especially receiving or sending larger amounts is often hairy. Lightning does well at processing payments for beer or coffee. But it can’t yet fully replace normal bitcoin transactions in everyday life.